InReview – Issue 50

The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profitss by C.K. Prahalad; Wharton School Publishing, 2005; xix, 401 pp.

C.K. Prahalad is the Harvey C. Fruehauf Professor of Business Administration at the University of Michigan Business School. His research area is corporate strategy and the role of top management in diversified multinational corporations. He is co-author of the best-selling business book, Competing for the Future.

Prahalad recognizes the large number of very poor people in the world and looks to market forces to address this poverty. His argument is that the “Bottom of the Pyramid” (BOP) in fact is a very good market because of the large number of people there. Companies that approach this market intelligently can not only make a lot of money but can also do good at the same time.

Doing this intelligently is the key. The tendency is to offer old, outdated products to this segment of the market, but that misses the point. Rather, understanding this market and its unique requirements leads to break-through products and services that not only meet the needs in the community but are also affordable. The book offers fascinating case studies, including a CD video archive with footage that brings the case studies to life.

Three areas (one minor, but irritating) detract from the book. The minor one is the use of uncommon acronyms to provide a shorthand for key points such as, “Lessons from MNCs for BOP markets — Lessons from multinational corporations for bottom of the pyramid markets.” It would be very difficult to start this book in the middle because the acronyms are defined only at first usage. A table in the back would help.

A more significant criticism is the implication that the ideas are dealing with all of the poor, but is in reality dealing with those very large markets of poor found in India, China, and some areas of Latin America. This is a crucial distinction, because Prahalad builds the case based on very large markets and the ideas do not transfer to many of the poor parts of Africa or smaller cities where “economy of scale” is not achieved. My other concern is the lack of recognition of what might happen to breakthrough price and capability when it works its way back to first world markets. It would seem to be only a matter of time before people would stop going to India for surgery at low rates, and demand the same treatments at home. This has interesting implications for companies offering these products.

In spite of these criticisms, this is breakthrough thinking and the book is well worth the investment of time and purchase. I highly recommend this book for study and discussion.

Reviewed by Al Erisman

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African Friends and Money Matters by David Maranz; Dallas Texas, SII International, Publications in Ethnography, 2001; vii, 224 pp.

David Maranz has lived and worked in several countries in Africa since 1975. The book grew out of the author’s frustration in trying to makes sense of the customs and practices in sub-Saharan Africa. Economic and social systems there are a challenge for Westerners, so Maranz uses his experience, reviewed by African colleagues, to try to provide insight for those who live, work, and travel in the region.

This book is easy to read, aided by anecdotes from the author and helpful illustrations created by African artists. It deals with everyday situations that visitors are likely to confront, and it provides not only an explanation of the behavior but also insight into the rationale for an approach that Westerners would find mystifying.

Our team read this book before heading to Africa, the first time there for most of us. Since it deals with very practical, everyday situations related to property, money, and relationships, it helped us a great deal in our preparation for a very different way of thinking. The author suggests it would also be helpful to Africans as well, giving insight on how their way of life might be perceived by others. Here are two examples:

  • Being involved financially and materially with friends and relatives is a very important element of social interaction in Africa.
  • Africans readily share space and things but are possessive of knowledge, while Westerners readily share their knowledge but are possessive of space and things.

While I found the book helpful, I admit I had some concerns. Can Africa really be so broadly characterized, or are there fundamental differences in different regions of Africa? To what extent are the characterizations bordering on stereotyping or prejudice, and where are they accurate?

Before going to Africa, this would be a very good book to read and think about. But handle it with care, and don’t be misled by some of its sweeping generalizations.

Reviewed by Al Erisman